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Switzerland versus the UK as an international wealth management centre: Reality outscores perception
16/05/2018 , Ian Orton

Switzerland easily outperforms the UK in an assessment of the criteria that underpins or determines success in the international banking centre stakes, according to a new report from Deloitte, an accountancy and professional services firm.

But when it comes to transforming these positional and/or competitive advantages into reality Switzerland’s advantage over the UK becomes very marginal, at least in terms of international assets booked at the two financial centres.

Switzerland remains at the top of a ranking of nine international wealth management centres with $1.84 trillion of international market volume (IMV), i.e. assets managed or administered in a location separate from the asset owner.

But despite all of the relative disadvantages identified by the Deloitte researchers the UK comes a close second with $1.79 trillion.

So how can this big difference between reality and perception be reconciled?

Cynics could out point that the report was produced in Switzerland by Deloitte’s Swiss team and may reflect home team advantage.

Another reason could be that despite efforts to incorporate quantitative data into the analysis a lot of this seems to depend upon the subjective judgments provided by unnamed “experts”.

This could introduce of any number of biases into the analysis, especially if many of the experts consulted happened to be Swiss, or had a pro-Swiss mentality. 
 
Or perhaps IMV assets, either in absolute or relative terms is not the most relevant metric to use in assessing the size and success of international wealth management centres.

The Deloitte researchers use a very nuanced approach in attempting to assess the relative advantages and disadvantages of the nine centres they rank within their study. Positional and/or competitive advantage may reflect a huge number and variety of factors. And some factors may be more important than others.

The Deloitte team attempt to identify the relative importance of each of the factors they identify and weight them appropriately.

They note, for example, that “provider capability” is becoming much more important as a success identifier and rank it accordingly. Tax and regulation, however, is becoming less an important, as jurisdictions have introduced measures to reduce the opportunities for exploiting regulatory arbitrage between competing centres.

But even when it comes to “provider capability” the UK fails to outrank Switzerland in any of the four capabilities encapsulated by the concept.

It is ranked fourth in human capital; second in wealth management service quality; sixth in “efficiency of wealth management provider”; and third in “digital maturity”.

Switzerland ranks first in human capital and wealth management service quality; third in wealth management provider efficiency; and second in digital maturity.

Indeed, the UK only manages to outrank Switzerland in three of the 14 factors that determine competitiveness identified by the Deloitte researchers. These are for its attractiveness as a travel destination; its capital market; and as a fintech hub.

So why the differential?

Deloitte may have to rejig its weightings. Or perhaps the factors identified by its research team are not so relevant after all.
 

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